Rachel Makes $80,000 a Year as an Accountant

question 124

Multiple Choice

Rachel makes $80,000 a year as an accountant. Based on her income, she is trying to figure out how she can build an investment portfolio worth $1 million by the time she retires. Rachel is at which step of the goal-setting process?

• A) evaluate available resources
• B) determine the goals individually or with input from others
• C) review the organization's mission
• D) write down the goals and communicate them
• E) review results and change the goals if they are not being met

Understand the concept of beta in assessing risk and its role in investment decisions.

Grasp the significance of factor models, including multifactor APT, in explaining asset returns.

Comprehend the underlying assumptions and implications of the APT.

Calculate expected returns on portfolios using multifactor models.

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Definitions:

Discount Rate

The interest rate that an investment's cash flows are discounted at to calculate its present value, often reflecting the risk and opportunity cost associated with the investment.

Equity-Financed

Funding a company's operations or projects through the sale of stock rather than borrowing.

Market Value

The current price at which an asset or service can be bought or sold, often used to refer to the total market capitalization of a publicly-traded company.

Total Earnings

The sum of all earnings generated by a company, including income from operations, investments, and other sources before taxes and expenses.